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(Sharecast News) - DSW Capital announced the acquisition of DR Solicitors for £6.1m on Monday, marking a transformative and earnings-enhancing move for the group.
The AIM-traded firm, said DR Solicitors, an award-winning UK law firm specialising in services for healthcare professionals, would continue under the leadership of its founders Daphne Robertson and Nils Christiansen.
It said the acquisition aligned with its strategy to diversify its revenue base, significantly reducing reliance on the SME merger and acquisition market from 68% to around 30%.
DR Solicitors has a strong reputation in the regulated healthcare sector, delivering consistent growth, with revenue rising 11% to £3.1m and a profit before tax of £1.2m for the financial year ended March.
Its addition would bring DSW a scalable, cash-generative legal platform that broadened its service offering to the medical and dental sectors.
The board said the acquisition was funded by a combination of cash and new equity, with £4.3m paid in cash and £1.8m in new ordinary shares.
It said the cash portion was supported by DSW's reserves and a £3m revolving credit facility secured with OakNorth Bank, which carried an interest rate of 4.5% above the Bank of England base rate.
Under a lock-in agreement, DR Solicitors' parent company, DR Services Holdings, had committed to hold the new shares for at least two years.
With the acquisition, DSW Capital's total issued share capital now stood at 25,131,108 shares, with DR Services Holdings holding an approximate 12.75% stake.
The move was expected to enhance earnings and support DSW's progressive dividend policy, solidifying its growth strategy in the professional services sector.
"This is a game changing acquisition, and we are delighted to announce it to our stakeholders," said chief executive officer James Dow.
"Not only is it immediately and significantly earnings-enhancing, but it also diversifies our revenues, building resilience, and provides an opportunity to expand into new professional markets.
"Working with DR's inspirational management team, we believe we can accelerate the growth of the business using the strength of the Dow Schofield Watts brand, and resources and, over time, build a substantial platform of diversified, niche legal services."
At 1150 GMT, shares in DSW Capital were up 23.18% at 67.75p.
Reporting by Josh White for Sharecast.com.
